Wood Pellet Prices Hit 20-Year High in Serbia
Pellet prices in Serbia have climbed as high as 47,000 dinars per ton, the highest in 20 years. Professor Branko Glavonjic advises buyers to wait a month before purchasing.
A ton of wood pellets in Serbia this summer costs between 38,000 and 47,000 dinars, up to 52% more than last year, according to data given to Nova ekonomija by Branko Glavonjic, a full professor at the Faculty of Forestry in Belgrade. Converted at the current exchange rate, that works out to roughly 325 to 400 euros per ton.
Prices vary within the market itself, too. According to the Serbian Chamber of Commerce (PKS), prices at individual wood yards differ by as much as 5,000 dinars per ton, while compared to last year’s heating season the increase has reached 4,000 dinars per ton. The Srpske novine portal reported a month ago that pellets had reached 350 euros per ton, at the time with warnings that the price could climb even further.
Why This Is the Most Expensive Pellet in Two Decades
Glavonjic says prices have never been this high since pellets first appeared on the domestic market.
“These current prices are the highest in the past 20 years, for as long as pellets have been produced and sold in Serbia.”
The reason, he explains, is not production but demand, which has grown faster than factory capacity. “The main driver is demand, which is currently several times higher than domestic production,” the professor says. Production plants, he adds, are running without interruption, but simply cannot keep pace with sales: “The factories are working regularly, but they just can’t make as much pellet as could be sold.”
Who Is Buying Earlier Than Usual
Part of the explanation lies in consumer behavior. Instead of waiting until October to stock up, as used to be the custom, this year people started buying already in July and August.
“Consumers are no longer waiting for October, they’ve already started buying in July and August, and in that kind of rush many don’t even ask about the price.”
As a result, some producers currently have no A2-class pellets in stock, and smaller wood yards are keeping waiting lists for buyers. The PKS, however, is not describing a general shortage: the issue is that supply at this particular moment cannot keep up with the spike in demand, not a lack of raw material across the market as a whole.
What Goes Into the Price of a Ton of Pellets
According to PKS data, wood raw material accounts for about 50% of production costs. Electricity makes up 10 to 15%, and labor another 10 to 15%. The rest is packaging, fuel, equipment maintenance, transport, storage and distribution, and it is the simultaneous rise in several of these items, PKS explains, that has been passed on to the retail price.
Vera Raznatovic, of the PKS Association for Energy and Mining, places the situation in the broader context of recent years:
“After the pandemic there was a strong recovery in demand, but at the same time serious disruptions in supply chains and constraints on the supply side. The situation grew even more complicated with the outbreak of the energy crisis and the war in Ukraine, when the cost of energy, transport and numerous raw materials rose significantly. Those costs were gradually passed down through the entire supply chain, including into the prices of final products,” Raznatovic told Blic.
This year’s season was further burdened by drought: low water levels on European rivers, above all the Danube, drove up the cost of transporting both raw material and finished product, which also fed into the final price.
When Could Prices Fall?
Glavonjic does not expect the pressure on the market to last through winter. His message to buyers is not to rush into buying at any price:
“My recommendation is not to rush in and pay whatever it takes, because there will be enough pellets.”
The professor estimates that pressure on the market could ease within the next month. The PKS is more cautious, tying further price movements to the balance of supply and demand through autumn and winter: if production manages to keep pace with demand, the market could stabilize, but if demand spikes again, the risk of another price increase remains open. In the meantime, the Chamber of Commerce has launched an initiative to include wood pellets in the state commodity reserves system, as an additional measure before any potential administrative regulation of the market.
The Professor Who Changed His Assessment in a Month
A month earlier, Glavonjic had offered a different picture of the same market. At the time, he argued that there were enough pellets, that production was running at full capacity, that a realistic economic price should be 35,000 to 38,000 dinars per ton, and that traders were artificially creating the impression of a shortage. Today the same professor is talking about demand three times higher than production and about prices that are the highest in two decades.
The gap between those two assessments, given just four weeks apart, shows on its own how quickly this market shifted over the summer, while the heating season was still months away.
